Google hit with record $22.5 million fine for privacy violations
by Bob White - Posted In: Technology & Entrepreneurial Companies
The Federal Trade Commission has hit Google, Inc. with a record $22.5 million fine in connection with alleged privacy violations. This amount was the largest fine ever imposed by the FTC for a privacy violation. Google agreed to pay this amount in a settlement with the FTC, so the company did not admit to any wrongdoing.
This matter resulted from the FTC’s allegation that Google had engaged in conduct that violated a previous agreement regarding Google’s privacy activities. The FTC had alleged that Google’s conduct in connection with its now-aborted Google Buzz social networking site contained privacy violations, and Google had agreed in an October 2011 settlement to refrain from any such privacy violations.
The FTC believes that Google used tracking software (commonly called “cookies”) to track certain online activities and patterns of users of Apple’s Safari web browser. Companies generally engage in these activities to gain valuable business intelligence on consumer preferences and trends. Advertisers can then target their advertising to specific customers. Google allegedly circumvented safeguards in Safari that are designed to prevent these consumer tracking activities. This conduct may have involved the activities of millions of Safari users.
The FTC found that this tracking activity violated the terms of the prior Google Buzz agreement. Under the terms of that agreement Google agreed among other things not to mislead customers about its privacy practices. The FTC alleged that Google had placed statements on one of its sites that told Safari users that they did not have to do anything to avoid being subject to tracking, and that Google’s conduct in using the tracking cookies violated the terms of the prior agreement.
FTC Chairman Leibowitz said that the “record setting penalty in this matter sends a clear message to all companies under an FTC privacy order”. In a clear reference to Google’s enormous size, he also said that “no matter how big or small, all companies must abide by FTC orders against them and keep their privacy promises to consumers”.
This action shows that the FTC places a high level of importance on privacy matters, and that its enforcement efforts in the privacy area will likely increase. It also shows that the FTC is not reluctant to hit big players with enforcement actions and fines in the privacy context. Read more about the FTC’s prior activities in this area. Many observers believe, however, that a $22.5 million fine is actually low given Google’s $12 billion in revenues last year and that this fine will not hurt Google. Some observers also believe that the FTC is not really able to adequately control or monitor the privacy activities of large technology companies given these companies’ substantial resources. For some strong analysis on the FTC’s lack of enforcement strength in these situations, check out this Wired article: Your FTC privacy watchdogs: low-tech, defensive, toothless.
Tags: Robert C. White, Jr.